Enel's approach and KPIs for circular targets
Enel, from the beginning of its activities on Circular Economy in 2015, placed a strong focus on KPI and metrics as this is an extremely quantitative topic and improvements have to be achieved through rigorous metrics. In the initial stages, in the absence of international reference methodologies who addressed the entire value chain, the company has developed its own model for measuring circularity, the CirculAbility Model©®1 .
Starting from this, which represented the conceptual framework of the Group, further initiatives were developed, from procurement (with the use of the Environmental Product Declaration to measure the environmental impact along the whole life cycle of the equipment that we buy) to Enel X with metrics to measure circularity at product/corporate/city/site level2.
Furthermore, Enel has focused on identifying and adopting simple economic/physical KPIs at Group level that can clearly represent the transition process towards circularity in terms of decoupling business activities from resource consumption and that can be understood easily from stakeholders and investors.
During Capital Market Day 2020, Enel launched a first KPI “Circularity Improvement” that measures the consumption of raw materials and fuels (tons) throughout the life of the production plants compared with the energy generated (MWh), committing to reduce resource consumption and improve circularity of the 92% by 2030 vs 2015.
Subsequently with the aim of creating a target that considers all business activities, Enel has developed a new KPI Economic CirculAbility©® takes into consideration the Group’s overall EBITDA (in euros) and compares it with the amount of resources consumed, including fuels and raw materials, consumed throughout the value chain by its various business activities (expressed in tons).
The resources consumed are valued as all the resources used in a year net of:
- Circular input: tons of material from previous life cycles (e.g. recycled, reused) or renewable
- Circular output: tons of materials recovered at the end of life
Below the main benefits of this KPI:
- Relevance: the KPI is able to measure the circularity of the company considering all core business activities and all the resource used. Furthermore, the focus of the KPI is to measure the main objective of circular business models i.e. the decoupling of resource consumption from value generation.
- Transparency and objectivity: the KPI uses public certified data (EBITDA) and objective data that can be certified and verified, therefore no hidden assumptions on subjective information are present
- Communicability: this KPI, based on economic/physical data, is easy to understand for subjects outside the company
- Comparability: the KPI can be applied to Companies of any sector (although the comparison has to be done only within the same sector to be meaningful)
The new KPI and the 2030 target were announced during the World Economic Forum 2023 in Davos during a panel organized as part of the ‘Corporate Circular Target-Setting’ initiative, implemented by the ‘Platform for Accelerating the Circular Economy’ (PACE), a global platform for public-private collaboration that was set up during the World Economic Forum to accelerate the transition towards a circular economy model, involving roughly 100 companies, public entities and associations.
By doing this, Enel becomes the world’s first company to take a pledge on doubling a circularity indicator that include economic and resource perspective.